Wednesday, December 17, 2008


Not all future events could be reduced to measurable risk. There is a residue of genuine uncertainty, and this makes disaster an ever-present possibility, not a once-in-a-lifetime shock.

How do rational people behave under conditions of uncertainty? The answer he gave was profound and extends far beyond economics. People fall back on conventions, which give them the assurance that they are doing the right thing.

The thought of ultimate loss which often overtakes pioneers, as experience undoubtedly tells us and them, is put aside as a healthy man puts aside the expectation of death. Our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spirits of a spontaneous urge to action, rather than inaction. If the animal spirits are dimmed and the spontaneous optimism falters, enterprise will fade and die.